Small Businesses Fight Big-Box Stores By Specializing

OK, we know mom and pop shops have been struggling for some time now, trying to compete against big-box stores and online retailers. Just in the last quarter, online sales jumped by 16 percent. But all is not lost for the shop around the corner. Some small retailers are actually embracing their size by making their businesses very, very specialized.

Here's NPR's Sonari Glinton.

(SOUNDBITE OF A CROWD)

SONARI GLINTON, BYLINE: You know how every town or neighborhood has their cast of characters? Well, in the hipster neighborhood of Silverlake in Los Angeles, Joe Keeper is definitely a character.

You're Joe?

JOE KEEPER: Yeah.

GLINTON: Nice to meet you.

KEEPER: Nice to meet you. I figured either you are very happy to see me or...

(LAUGHTER)

GLINTON: I am very happy to see you.

KEEPER: Nice.

GLINTON: Less than five seconds in, and Keeper was already making fun of the size of my microphone. Joe Keeper runs a bar accessory store called bar keeper and it specializes in barware. Get it? Joe Keeper, bar keeper? His brother also has a store.

KEEPER: Sure. My brother Daniel owns a store in Austin, Texas called Zoo Keeper and his business model is not too different from mine.

GLINTON: It's a pet store that specializes in exotic pets - lizards, snakes, spiders. Eight kids in that family, not one accountant. Anyway, what's Keeper's business model? Be very specific. What he can't make up for in volume he can make up being really niche. There's a whole wall of just bitters, small amount of small-batched liquors, stirrers, cocktail glasses, shakers.

KEEPER: So if we walk around the store here, these are all bar tools.

GLINTON: So these are - and these are just, like, you know, spoons.

KEEPER: Spoons and hawthorn strainers and measuring cups and we like to think - consider our home user.

GLINTON: It seems like I can buy this. You know, this is just an (unintelligible) measuring cup. I can buy this at Amazon. What makes it special here?

KEEPER: The product itself is not special. I don't like to think that I sell products. I like to think that I sell the ritual, the wisdom. My customers don't shop here to purchase things necessarily. My customers come here to ask questions.

GLINTON: The store, Bar Keeper, is an example of niche retail. That's the business that focuses on a single type of product or goods that are in a very specific category. These retailers, like Keeper, know that they won't catch a whole swath of customers, but they can meet very special needs.

MARSHAL COHEN: People have recognized that one of the ways to compete with the chains is to go the opposite way and create the local flavor.

GLINTON: I talk to Marshal Cohen from time to time about retail. And he's a senior retail analyst with the NPD group in Port Washington, New York. He says consumers know that they can get things cheap, but he says people want to have a little fun when they spend their money.

COHEN: They want their money spent on the perfect product, the right product, and they want to speak to people who not only are knowledgeable about the product but passionate about it as well. That's what's starting to happen. Consumers are looking for the local merchant with a great deal of knowledge.

GLINTON: In cities like Los Angeles, New York, Chicago, small retailers are filling in the gaps that are left behind from big retailers like Amazon or big-box stores, and at the same time, stores like JC Penney and Sears are on the ropes, so knife stores, pen stores, denim stores that don't sell jeans but just repair them, olive oil stores, organic dog bakeries - are popping up in major cities.

But they don't have to rely on foot traffic. A niche business can use the Internet as well. Meanwhile, Marshal Cohen says the same thing that's happening in retail happened in beer. Think about microbrews. So no matter how small the town is, increasingly they have a small town brewery.

COHEN: That's part of the future, the ability to be able to buy the product you want. How you want it, when you want it and where you want it is all part of this up and coming niche market business, and that starts from the small business all the way up to large businesses who are going to be forced to figure out how to personalize product.

GLINTON: Cohen says one of the ways to personalize products and the shopping experience is by talking to and knowing the customers. And he says even though mom and pop stores have been on the ropes for 150 years, that's still one advantage they have. Sonari Glinton, NPR News. Transcript provided by NPR, Copyright NPR.